Buy banking stocks on correction: Vikas Khemani

Vikas Khemani of Edelweiss Securities told CNBC-TV18, "In banking sector, private sector bank numbers were pretty good, the reason why PSU bank numbers did not appear so bad because expectations were very low. The market was very, very tentative or expecting the worst to happen in most of the PSU banks. So hence as and when the report came pretty much in-line with expectations. The market did not react much and to some extent there is a belief which got generated that worst is behind on the economic side. From hereon you will not see numbers deteriorating, hence you will saw short covering happening in the PSU banks and the sudden rally happening."

"Having said that, while it appears that worst is behind, but I think improvement is yet to happen. We have recently heard Chanda Kochhar, CEO of ICICI Bank saying that NPAs will further go up in the system, restructured assets might go up in the system. So it is not that suddenly the things have improved in a big way to call for a big rally in the sector," he added.

"I do believe that things are better than what they were before and stocks are trading at good valuations. So if the market corrects given the ongoing risk-off trade and you see banking sector correcting one should look to add to the portfolio, because as and when the recovery happens banking would be the one sector would lead the rally like it lead this time. Same way correction also could be led in this fall by the banking and the capital goods and the sensitive sectors."

"The only point I would like to make here is that as and when the recovery happens this sector will give good returns and as and when stocks get to the cheaper valuations one should look at that. So one has to really see from the investing perspective, traders to get in get out, but if you are a medium-term to long-term shareholder on the correction you would look to buy banking stocks from a 12-18 months perspective."

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